As most expected, the final retail sales results for the month of December were disappointing and most likely marked the start — and not the end — of a very soft retail market that will surely result in the closure of more stores and many retail nameplates.
Retailers did use the Holiday period to clean up inventories as many delay the receipt of spring goods and others start the season off in promotional mode.
In the sporting goods market there were few bright spots this Holiday season as the must-haves over the last few years — Crocs, Heelys and The North Face — had no obvious replacements and traditional big-ticket Holiday sales in fitness and table games failed to materialize. The only clear winners were those that carried firearms — especially handguns and ammunition — and “as seen on TV” items like Perfect Push-up and Perfect Pull-up.
According to a monthly survey of 36 chain stores conducted by the International Council of Shopping Centers, U.S. chain same-store sales fell by 1.7% for December 2008 on a year-over-year same-store basis. ICSC said November-December combined Holiday sales declined 2.2% compared to the 2007 season — the weakest Holiday shopping season since the index was started in 1969. Wal-Mart and Drug Stores played a big part in keeping the retail decrease as low as it was for the month as many luxe stores and teen retailers posted double-digit declines in December. The consolidated comp store results would have been down 4.3% for the month when excluding the Wal-Mart results and down 2.1% when excluding Drug Stores. Aside from Drug Stores, which posted a 3.4% increase for the month, only the Discount channel posted an increase, eking out a 0.4% gain for the five-week December period.
Wal-Mart, which posted a disappointing 1.9% increase for the month saw more competition from other discounters like Kmart, which posted a 1.1% comp sales decline for the month after a 10% decline in November, and Target, which also performed better in December than in November with “stronger results in the last two weeks of the month” on its way to posting a 4.1% decline.
Wholesale Clubs, which have been the darling of late, would have been up 1.6% for the month if not for the sharp decline in gasoline prices. Including fuel sales, Club sales were down 3.3% for the month.
Luxury Store sales were down 17.4% for the month, while overall Department Store comps were down 6.8% for the period.
Many retailers saw improved sales toward the end of the December sales period, which had a full nine days of selling after Christmas Day. There was also a lot of pent up demand toward the end of the month after a slow start to the month and tough winter weather conditions in the Northeast, Midwest and Pacific Northwest, but it wasnt enough to offset the slower start.
According to preliminary retail point-of-sales data compiled by SportScanINFO, sales of Sport Footwear jumped in excess of 20% in the last week of the month after posting sharp declines throughout the earlier part of the month. Sport Apparel sales were up even more as cold weather and heavy inventories of Fall/Winter product gave many retailers the ammunition they needed for a strong promotional close to the period.
Disappointing sales of holiday gift cards are likely to impact the retail business in January. ICSC is forecasting a 1.0% decline in same-store sales for the month.
